Carrying It Out
Community Contracting

A few notes drawn from experience are included, followed by a more detailed description of how to undertake community contracting.

Notes on Hiring Communities

Excerpt from: Housing by People in Asia. Newsletter of the Asian Coalition of Housing Rights. No. 12, April 1999. p 25.

Communities directly benefit from project implementation through employment in addition to the benefits of the project itself. Benefits of the contract go to the community and not to a contractor, middle-man or development agency. The concept is promoted as a more efficient, appropriate alternative to expensive, top-down, contractor-driven community improvement. The approach will help skills development as well as generate income. The jobless and underemployed are key candidates for participation.

The range of activities in which community members are hired include designing, costing, as well as carrying out improvement projects such as bridges, walkways, drainage, community centers, garbage cleaning. Quality control should also be by the community.

People from the community should physically work on the contract. Hiring of a few community leaders as supervisors is considered to be only lip service to the idea of community involvement and benefit.

There are several forms: supervision of and management by the community of labor recruited from a broader area; piece-work (like tree-planting, road-laying, well-digging). Free labor is encouraged, and community contracting is seen as an opportunity for mobilizing a wider network of low-income communities: a form of indigenous scaling-up through one-by-one grassroots expansion.

There may be hesitation to use community contracting within the framework of a larger project agenda because of time and quality concerns, and increased administrative burdens.

Undertaking Community Contracting (Community Partnering)

The full report is available from Loughborough University. For further information: M.Sohail@lboro.ac.uk

Conventional approaches have proved inadequate to meet the demand for shelter and services created by rapid urban growth. The ability of government to provide infrastructure is already outstripped by the inexorable increase in demand, so that the poorest and most vulnerable will continue to suffer from the lack of services and work opportunities.

Community contracting or community partnered procurement is an approach to deliver improved services where the communities take a part in the planning and implementation.

It reflects the continued involvement of people with the planning, implementation and sustenance of local infrastructure and service improvements, and with income generation, enterprise development and skills training. This implies:

 full acceptance of the urban poor as primary stakeholders in local infrastructure provision.
 developing longer term more open-ended relationships, encompassing joint financing, planning, design, implementation, hand over and maintenance.
 promoting co-operation both formally and informally with government agencies and NGOs.
 wider targeting of the urban poor, rather than solely area-based dwellers in specific slums, as local inhabitants do not necessarily carry out improvement works themselves because of lack of both time and relevant skills.

Advantages of community partnering

 Community members are directly affected by the way in which work is carried out and have a strong incentive to see that it is carried out properly.
 Resources can be channelled into the community rather than being siphoned off by outside contractors. Whereas conventional procurement of infrastructure has a single benefit, the provision of the infrastructure itself, community partnering can double the benefits obtained from investment. Infrastructure is provided and employment opportunities and enterprises are created in the community.
 People are empowered to take more control of their own lives.
 Increased access to local knowledge is gained on such issues as the location of existing services and a reduction in the potential for disputes with community members in the course of work on site.
And in a wider context, it also addresses the poverty agenda:
 the participation process offers empowerment and greater control to households and community groups.
 employment opportunities lead to income generation for low-income groups who are paid for undertaking work associated with government funded improvements.
 small enterprise development is encouraged as micro-contractors develop and exploit niches created.
 the work results in increased business for building materials suppliers.

Constraints

Most occur in the context of working with the local government:

 Lack of capacity of the middle ranking engineers within the government.
 Considerable transaction costs are incurred by all involved.
 Time constraints by government officials
 Increased management costs, which may be considerable especially when international agencies are involved.
 Some form of on-the-job training and skills improvement is needed. It is unreasonable to entrust community groups with tasks of which they have no previous experience.

Where does the money come from?

The source of funds is the single most important factor in relation to the procedures and rules which are adopted:

1 - Government money is used to finance works; community groups are paid for services which they provide. This injects money into the local economy.
2 - Government money is not involved; the finance is raised internally by community groups and existing recirculates in the local economy.
3 - Split funding with contributions from government and community groups.

 Community as full promoters
 Community as partial promoters
 Community as engineer (technical supervision)
 Community as contractor

Identifying capacity

Capacities in different areas are required:

 Technical: for community as construction contractor or engineer; urban government and/or NGOs as technical facilitators.
 Financial: for community and/or NGOs as total or partial promoters.
 Managerial: important for all partners and all roles.
There are important indicators to look for and potential activities to support within the community when considering different roles, including:
 Residents who are experienced skilled construction workers; they play a key role in managing the construction process as well as contributing their artisan skills. They have the potential to act as trainers and demonstrators.
 Residents who operate as local entrepreneurs surviving in the local economy, but not necessarily in construction, can assist in organizing the business development side.
 The ability to raise and handle money for collective activity; the urban poor can be good financiers. Community groups may not have experience of bank transaction; individual or joint personal accounts are easier to open than company accounts.
 The management of past and existing community based activities. How transparent is the decision making process; are disadvantaged groups part of the decisions or are they simply passive listeners?
 Can it be demonstrated that a decision was taken in good faith if it goes wrong. This could be facilitated by keeping a record of the factors and the risks considered at the time of the decision making.
 Evidence of financial and management accountability in community groups/NGOs: can expenditure be traced.

Note: some traditional indicators used in evaluating the capacities of conventional registered contractors may not be relevant when considering the community as a potential contractor. Examples include: evidence of financial strength from bank accounts; numbers of people permanently employed; inventory of plants and tools owned.

What is involved in a contract?

Three objectives need to be met in any contract for work:

 Cost: has the work been completed within the costs agreed in the contract?
 Quality: has the work been done in accordance with what was specified?
 Time: has the work been satisfactorily completed within the time specified?

Three points need to be considered:

 Clarity about responsibilities.
Use simple and clear language, clarity who will be responsible, how and by whom will physical progress and quality of work be monitored, what are the bonuses and damages for late completion, how is the completed work to be handed over, and how will disputes be resolved.
 Clarity about money.
Who is paying the bills, if joint account what are the mechanisms for operation, what are the mechanics for channelling money for work completed and requesting an advance, will there be compensation if the bills are not paid on time, what are the audit and account requirement, who is accountable to whom and what are the liabilities and responsibilities.
 Clarity if a contract is involved.
All signatories must understand what they are signing for, who are the parties to the contract, what are the sole and joint responsibilities, what will be the value of the contract, what will be the duration of the contract, what securities are required and why, how can partners terminate the contract and for what reasons, who will actually sign the contract, and are the parties clear about the enforcement of the contract.

Selecting a contract type

 Legal contracts are designed to be enforced by courts and need to be used if urban governments are involved.
 Relational contracts rely on self-enforcement or private ordering.
This leads to several options:
 Verbal contract: generally the mode in the informal sector, but also common in formal sector sub-contracting. If specified there is a mutual verbal agreement between stakeholders, if unspecified there is not specific verbal agreement, but an understanding as to expected roles.
 Written informal contracts: simple legal documents.
 Written formal contracts: typified by the standard contracts used by governments to tender contracts.
The following should be noted:
 Are contractors literate or do they have access to somebody who could read and translate the documents?
 Are the potential contractors already used to working with any particular type of contract?
 Is the contract likely to be enforced by courts? If no, an informal contract may be adopted.

Hints in preparing documents

 Keep the language simple and clear. One or the other party may not be literate and have no legal background.
 Are the documents clear enough for a community group to reasonably cost the works and services for which it is bidding?
 Are the documents compatible with the custom that the local small contractors and artisans are used to working with.
 Give the contract documents a 'managerial' function, including communication of what is to be done.

Managing community partnered micro-contracts

 The right atmosphere.
Government officials are likely to be challenged and questioned by the community, which may engender some anxiety in the officials. An atmosphere of mutual respect and support is required, which allows for flexibility as there are no hard and fast rules of management.
 An open-ended process.
This process has the wider objectives than the production of goods or delivery of services. Even though a contract has discrete start and completion dates, community development, empowerment and poverty alleviation are longer term and open-ended. The impact is likely to continue after the completion of the works.
 Irregular inputs.
The resources within a community vary from one situation to another. People are likely to be working elsewhere and may only be available during evenings or weekends. This is in contrast to government officials who work regular hours.
 Informal and formal positions.
Many artisans, who have a key role, may lack formal qualifications although well experienced. On the other hand government officials are professionally qualified and formally trained. This difference in background may put a strain on the communication channels between the two.
 Guidance not policing.
A community has nothing to gain and everything to lose if it produces poor quality work; in terms of quality there is an alignment of the goals of the community and the government officials. In a conventional situation construction supervisors are policing the contractors. In community partnering procurement the community groups need guidance and support.
 Monitoring.
It is crucial to keep good records in order to monitor performance, continually strive for higher standards of quality, and build-up a base of experience which can be used as a sound basis for future estimation.